Corruption and the Size of Local Governments: Are They Related?

Using a large cross-country data set of developing and developed countries it is found that less fragmented municipal government structures are associated with more honest (less corrupt) behavior by government officials. The evidence is strongest for high-income countries. Corruption is measured various ways, including perceived corruption by citizens and experienced corruption by business managers. Fragmentation is defined as the average “size” of a municipality, measured alternatively in terms of geographic area or population served. A similar conclusion is drawn for other “bottom-tier” governmental units, at the same level as municipalities or one tier below, although the results are less strong statistically. Overall, these findings suggest that some caution should be exercised before adopting more fragmented local government structures as a strategy to promote good governance.